Category Archives: Guest Author

e-Leaders Speak: Gary Hare of Vinimaya on “B2B e-Commerce: Are We Starting To Get It Right?”

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Today’s guest post is from Gary Hare of Vinimaya.

Being successful at B2B e-Commerce is hard for both buyers and suppliers! Unfortunately, despite the hype, there are more stories of failure than success out there. Why haven’t we made more progress? Who’s to blame? These are valid questions, but there is one question that, if we can answer it, might hold the key to success.

Why has Consumer e-Commerce adoption blown past B2B e-Commerce?

Speaking as someone who has been in B2B e-Commerce since the days EDI was considered a “killer app“, and acknowledging that are some “complexities” in B2B that don’t exist in the consumer world, I am going to try to answer this question by noting three things that consumer e-Commerce does better than B2B e-Commerce:

  1. Usability – How many clicks and screens does it take to search for an item and place an order in SAP SRM? I don’t know exactly, but I do know it’s a lot more than ordering from Amazon! For years, B2B was all about how much functionality can we jam into a screen … the problem being you use 10% of the functionality 90% of the time. Consumer sites rightly focus on that 10%.
  2. Content – In the consumer world, all the content is available right on the web. You don’t have to join a supplier network or get a catalog file loaded to place an order. Although many B2B suppliers have invested heavily in their web sites, the majority have not, at least when you take into account the total number of suppliers. There are many reasons for this, some valid (e-Procurement system integration issues), some not so valid (don’t see the ROI).
  3. Technology – Ever hear the terms mash-up, widgets, AJAX, intelligent agents, REST, meta-search, RSS and JSON in the context of B2B technology? You probably hear terms like database, SQL, JDBC and HTML more often. The previously mentioned terms (e.g. mash-up, widgets, etc.) are all commonly used Web 2.0 technologies and protocols that make up the consumer e-Commerce “stack”. Note that they don’t replace the B2B technologies (e.g. database, SQL, etc.), but enhance their capabilities by providing an abstraction layer on top of them to make them more “web sensitive”, which makes it easier to do things like federated search and secure content syndication, without dedicated connections, using only the Web “as is”.

So, at the end of the day, consumer e-Commerce has simplified the online buying process by combining great usability with robust, easily available content; easily accessed via “web sensitive” technologies.

Now here’s the good news. B2B now gets it! You’ve been hearing for years about B2B providers who are “consumerizing” the B2B user experience (e.g. #1). Every day, more and more suppliers make their content available on the Web, and there are now providers out there who can build and even host B2B websites for as little as $5,000 a year (e.g. #2).

And what is enabling these changes is the technology (#3). As more and more B2B providers innovate and adapt consumer e-Commerce technologies to their B2B problems, B2B e-Commerce adoption will ultimately take off just like consumer e-Commerce did in the early 2000’s! To ensure this happens, it is important for users to engage these innovative providers, versus signing up for the same old solution from the same old provider (a wise man once said, “the definition of insanity is doing the same thing over and over and expecting different results“).

I guess the question now becomes, which of these innovative providers is going to be the eBay / Amazon / Google / etc. of the B2B world?

Thanks, Gary!

e-Leaders Speak: David Bush of Iasta on “Strategy for Success in e-Sourcing: Sourcing Execution”

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Today’s guest post is from David Bush of Iasta.

As any one who has been around e-Sourcing technology for any amount of time knows, the greatest sourcing and procurement successes are directly tied to properly managing adoption and continued usage by both the sourcing and stakeholder communities. The best software in the world is only marginally effective if only a tiny fraction of spend is under management and being executed through a strategic sourcing process. To be truly successful, companies must bring more spend under management.

In this Sourcing Innovation series which highlights strategies companies can utilize as the global recession slowly releases its grip, I will focus on a critical strategy that consistently drives success. It is not a theoretical concept that requires the use of the latest-and-greatest functionality, but one that works in the real world with tools most companies already have in place.

The critical strategy I refer to is Sourcing Execution, the tactical operation of strategic sourcing performed by a third party for a procurement organization. Most people are familiar with procurement outsourcing from years of experience with very large entities such as IBM or Indian BPO providers handling the P2P process in a remote call center. What a number of organizations are beginning to learn, however, is the same tactic can be done within the sourcing department. Automating transactional driven functions within the sourcing process increases the efficiency and impact of sourcing teams which will, in turn, increase spend under management and savings.

AMR Research has covered this topic very well, specifically in their latest research on “The 2009 Supply Management BPO Landscape: Short-Term Body-Shopping Trumps Business Transformation”. They have built a nice example of this process contained within the Spend Analysis model summarized below.

Offshore Operating Model
As clearly outlined in the example, there are very distinct areas labor can be divided. The outsourcing of tactical data management can increase the effectiveness of the local resources. Another compelling strategy for Sourcing Execution is to identify and outsource the “block and tackling” of the competitive bidding process. Companies can use different methods to achieve this goal:

  1. Tactical Execution:
    Support from the partner is generally remote and process oriented. Internal stakeholders prepare the bid data and deliver it to the partner to be executed in a pre-determined way as designed by the procedure team/steering committee. For example, taking the RFP elements and building the online sourcing project and inviting suppliers to participate. The third party makes no sourcing decisions, but the time line is dramatically compressed, thus allowing the organization to focus on the more strategic objectives of the category.
  2. SME Assisted:
    The next level of “on-demand” support makes Subject Matter Experts (SMEs) available on a short term basis, to offer strategic input during the most critical phases of the sourcing process. These SMEs might be experts in supply markets, risk/financial analysis, e-Sourcing or specific category expertise that is valuable. For example, developing a complete RFI/survey or relevant lotting strategy.
  3. Category Implementation and Compliance:
    A sourcing project is only as good as the implementation rate. If a company identifies 20% savings for a category and implements 5%, the actual delivered savings is zero. Category compliance services provide tactical support for tracking and following the implementation of awards by managing reports that highlight compliance areas that need attention. The service can also distribute repetitive information to suppliers and stakeholders as it relates to new contracts.
  4. Category Management:
    Full blown sourcing advisory services at a category level where a qualified sourcing professional manages the most of the sourcing lifecycle — from spend data collection through award analysis and negotiation. This is the traditional X-step process, depending on which management consulting firm got their first. The SME is an extension of the procurement team for 8-14 weeks on average. This period can be extended if implementation and compliance are required.

A shared service approach to outsourced strategic sourcing delivers numerous benefits. A normal sourcing lifecycle can be reduced to 2-6 weeks from a standard 2-6 months. This allows internal category managers to focus on strategic initiatives, supplier development and core Tier-1 sourcing opportunities. Allowing indirect and “C” Level items to run through collaborative management, increases the amount of spend under management and reduces costs dramatically without adding head count.

Two resources on this topic that are worth exploring in more detail are the previously mentioned AMR Research (specifically Phil Fersht and Mickey North Rizza) and TPI. Bill Huber at TPI is very wise in these topics as he has implemented and researched outsourcing for years.

Simply outsourcing for the labor arbitrage is a short term plan which will not have sustained results. Simultaneously leveraging a technology, process and people strategy enables you to realize sustainable objectives.

 

Thanks, David!

Sourcing Innovation Brings You The Best From the Best

Starting next week, Sourcing Innovation will be running a special series on “Sourcing Tomorrow: The e-Leaders Speak” that will feature pieces from the visionaries behind many of the top e-Sourcing and e-Procurement vendors. So far, a dozen leaders of a dozen leading e-Sourcing and e-Procurement vendors have agreed to put their thoughts to paper on what technologies and strategies you can use to climb out of the recession and ride the leading edge of the wave to recovery. Up first will be Iasta (David Bush), Vinimaya (Gary Hare), Enporion (George Gordon), Trade Extensions (Garry Mansell and Chetan Raniga), and SafeSourcing (Ron Southard). Aravo (Kevin Cornish), Coupa (Dave Stephens and Jason Hekl), and Ketera (Chris Newton), and possibly a few others, have also agreed to participate.

But Sourcing Innovation isn’t going to stop there! After that, Sourcing Innovation will be bringing you “Sourcing Tomorrow: The Service Leaders Speak” where the likes of Jim Wetekamp (of Bravo Solution), Bart Richards (of The Claro Group), Bob Rudzki (of Greybeard Advisors), Mark Usher (of Treya Partners), and William Dorn (of Source One Management Services), among others, will be bringing you their thoughts on how service and solution providers can help you climb out of the recession and ride the wave to profitability faster than your competition.

And Sourcing Innovation isn’t going to stop there either! When the second series is complete, Sourcing Innovation is going to invite selected bloggers to respond to the first two series and the changing markets with their thoughts.

But that’s not all! Sourcing Innovation also plans to run a couple of very special series this fall. First up will be an 8+ part series on Overcoming Cultural Differences in International Trade, partially based on the work of our resident expert on international trade, Dick Locke. This series, which will be edited by none other than Dick Locke himself, will address some key issues in International Purchasing and how they materialize in your global sourcing endeavours.

As promised in Supercalifragilisticexpialidocious, Sourcing Innovation will also run a multi-part series that dives into the recent CAPS Research focus study on “the role of optimization in strategic sourcing”. Taking it piece by piece, I will address the points that need to be highlighted, the points that need to be addressed (but weren’t), and the points that were a bit misleading and make sure that, once you have digested the report and this special series, you have the best understanding of today’s strategic sourcing decision optimization technology that you can have.

I’ll also be reviewing some of the new releases by those vendors that decided to keep their heads above the sands and innovate through the downturn (and maybe I’ll even coerce the Sourcing Maniacs out of hiding).

And that’s just the beginning. Stay tuned!

Doug Smock on the Dreamliner Supply Chain

 

This guest post is from Doug Smock of Design News and BCC Research.

The Dreamliner aircraft development project was launched by Boeing six years ago as one of the most ambitious technology and supply chain projects in history. On the technology side, the Dreamliner was the first commercial airliner design with a plastic composite body. On the supply chain side, Boeing made the switch from a top-down, disciplined captive design and manufacturing approach to one that was largely outsourced to suppliers around the world.

The Dreeamliner is now two years late, and it’s not an exaggeration to say that Boeing’s future rests on its outcome. Three years ago, Boeing officials were eager to talk about the great work on the Dreamliner, on the technology and supply sides. Now they’re mum, but I took a couple of shots at raising the questions about the Dreamliner, and then making some educated guesses about the answers.

So what are the questions?

And what are the answers?

Read my pieces on “What’s causing huge delays for the Boeing 787 Dreamliner” and “why the Dreamliner is so late” to find out!

Thanks, Doug.

Fines and Delays Could Hit U.S. Importers Hard in 2010

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Today’s guest post is from Matt Gersper, founder and president of Global Data Mining and co-owner of CUSTOMS Info. Matt has over 20 years of experience in process optimization and data mining in the business domain.

Failure to comply with the Importer Security Filing (ISF) regulations could bring financial disaster to unprepared U.S. businesses. There are three major reasons business leaders should assure their companies are compliant and each reason has direct bottom-line impact.

First is the risk of significant penalties for non-compliance. The ISF regulations, commonly referred to as “10+2”, state an importer can be fined $5,000 per filing if an ISF is not timely, complete and accurate. The penalty phase begins January 26, 2010.

This chart shows penalties that could be incurred in just the first 60 days of the penalty phase for 5 companies. Penalties of this magnitude would quickly get a CEO’s attention, and could have a devastating impact on any business. You can calculate your potential exposure based on the number of ocean entries you have.

 

Import Value Ocean Entries Potential Risk
Company 1 $2,784,000,000 10,969 $9,140,000
Company 2 $1,076,000,000 39,111 $32,592,000
Company 3 $806,000,000 5,541 $4,617,000
Company 4 $104,000,000 1,306 $1,088,000
Company 5 $83,000,000 869 $724,000
    2 months of penalties (Jan 26 through Mar 25, 2010)

 

Second is Custom & Border Protection‘s (CBP’s) renewed commitment to enforcement and revenue collection. CBP’s recently published “Trade Strategy for Fiscal Years 2009-2013” makes it clear just how important revenue collection has become to the U.S. Government. Shockingly, CBP’s report lists “Enforce US Trade Laws and Collect Accurate Revenue” as its number two strategic goal ahead of “Advance National and Economic Security“.

Third is the impact supply chain delays could have on your business. A recent study by the National Association of Manufacturers (NAM) estimates the ISF regulation will create a permanent 2.8 day delay in supply chain speed.

This chart applies the cost model of supply chain delays from a Purdue University study and estimates the annual financial impact that would be incurred if these five companies suffered the 2.8 day permanent delay.

 

Import Value Delay Days Estimated Cost
Company 1 $2,784,000,000 2.8 $62,361,600
Company 2 $1,076,000,000 2.8 $24,102,400
Company 3 $806,000,000 2.8 $18,054,400
Company 4 $104,000,000 2.8 $2,329,600
Company 5 $83,000,000 2.8 $1,859,200

 

While some importers hold out hope that the penalty phase will be postponed by CBP, hope is not a strategy. “I’d let my CFO know the penalty phase will be going into effect as scheduled and the implications could have tremendous negative impact on the bottom line”, says Beth Peterson, President of BPE. Peterson has been a strong advocate representing the interests of industry to CBP regarding the impact the ISF regulations could have on U.S. businesses.

American Shipper, BPE and the International Compliance Professionals Association (ICPA) conducted a research project to understand the current state of ISF compliance, the impact this regulation has (and will have) on the supply chain, the challenges that companies are facing in their attempts to comply with ISF and the best practices importers can leverage to comply with — and ideally benefit from — ISF compliance. Their study revealed 3 of the top 4 challenges importers are having with 10+2 compliance are related to data management.

DATA MANAGEMENT CHALLENGES

  • Nearly 60% of companies have challenges providing timely ISF data.
  • Nearly 40% struggle to collect complete ISF data.
  • Around 20% have problems with the accuracy of the data they are providing.

These are the very three issues causing penalties to be assessed. To make matters even worse, the penalties estimated above could be twice as large since the regulations state that fees can be as high as $10,000 per filing if two or more violations occur. For example, the filing is not timely and is it not complete.

Modern database and workflow applications can dramatically improve a company’s data management efficiency and significantly bolster capacity to achieve ISF compliance. Web-portals, or central information hubs, allow parties around the world to collaborate and interact online, with the same information, though a single platform. Here are six tips that can help you select the right solution to achieve ISF compliance and improve data management.

  1. A secure website accessible worldwide by any authorized user.
    It should provide control over multi-party collaboration and the ability to grant privileges by user and role.
  2. A centralized database that is the system of record.
    A “single version of the truth” for 10+2 and other customs information about every item enterprise-wide.
  3. Easy upload of data from any system, business unit, or supplier.
    It should provide easy to use features to normalize, view, sort, filter, and work with data.
  4. Easy integration with existing systems.
    It must manage the data used by your various business applications that support your global trade initiatives.
  5. Leverage best-practice functionality in a manner that increases productivity.
    Web-based applications can automatically update users about recent changes to the system and its data.
  6. Unparalleled visibility and oversight.
    Automatic record keeping of the critical data elements created in each step of the workflow in every business unit around the world which is required to meet the reasonable care standards of modernized custom agencies.

Selecting a system that meets these requirements will dramatically improve a company’s enterprise-wide data management efficiency, help achieve 10+2 compliance and avoid financial penalties. In fact, 10+2 can be a hidden opportunity for strategical companies. Optimizing inefficient data management processes can improve supply chain performance and deliver a positive return on investment. For example, improving supply chain speed by just one day would be worth $800,000 per year to a company importing $100 million annually.

I strongly advise executives of companies importing into the U.S. to act with urgency. According to estimates by the CBP, “it takes sixty to ninety days to ramp up and be filing correctly”. Best-in-class companies are funding cross-functional teams to develop a strategic enterprise-wide solution, using 10+2 as a catalyst to optimize currently inefficient business processes, and creating competitive advantage for their company at the same time.

Thanks, Matt.